I signed up for a two days seminar called 'Millionaire Mind Intensive' facilitated by T Harv Eker, and it turned up to be one of the most inspiring session I ever had in my life.
The most important concept from the workshop that I would like to share here is 'The Jar System', no rocket science but just a simple system that help people to start financial planning by distributing income into 6 different categories. Anyone can start with putting cash into 6 separate jars as shown in the following pictures or fund transfer to 6 separate band accounts, I opted for the second option =)
1)'NEC' or Necessity
- Fund for daily expenses and usually accounted most portion
of the income. The most important element here is Insurance
Protection, where a single bill from hospital nowadays might
wipe out all your hard saving.
"Mr X has 200K long term saving after 10 years hard work
but unfortunately he is diagnosed with chronic disease
that need his entire saving for complicated medical
procedures. This scenario won't happen if he had bought
insurance that only cost RM1000 per annum"
2)'LTSS' or Long Term Saving
- Cash or cash equivalent for future expenses such as
marriage, new house, car or serve as emergency fund. When
one facing financial difficulties, the last person who will
help you is BANK. So cash is very important.
KWSP contribution excluded as long term saving
"Mr Y is under voluntary separation scheme after working
for 10 years in a company, he loss his sole income source
but fortunately he has cash of 6 months necessity expenses
in the bank to sustain his daily needs until he finds a
new job"
3)'FFA' or Financial Freedom Account
- Perhaps the most important account !!! Funding investment
(stock/mutual fund etc) related activities or start up
business to generate passive income. Not a single penny
should withdrawn for this account else the golden goose is
killed halfway
"Mr Z is a saver where he put every single penny in bank as
fix deposit to earn 3.0% interest. After retirement he
found out his fund is insufficient for daily needs, WHY ??
Inflation...Inflation...Inflation of 5.0% annually that
eroding his power of money. Mr Z is so regret he did not
invest in other investment vehicle such as mutual
fund/stock that would generate more return than fix
deposit since young"
4)'EDUC' or Education
- Not for your kids but for yourself. Attending
Seminar / training workshop.
"Mr A does not know neither stock nor mutual fund, so he
decided to participate in a course "Value Investing In
Stock Market". Since then he is able to generate
substantial return from the stock market"
5)'PLAY'
- My favourite account ^.^. Spend every single penny out of
this account for travelling, partying etc to explore new
experiences or recharge your mind energy
"Mr B always reserve some fund in Play account and every
year he is able to travel with his love one. Work-Life
Balance"
6)'Give'
- When you start 'giving', you will 'gain' more in the future.
For your social responsibility fulfilment and perhaps for
your parent.
$$$ AMOUNT IS NOT IMPORTANT How much money you put into each jar is not important, what really matter here is the HABIT you cultivate along the way.
Discipline is the key for this practice and if you did, your financial status would be in a good shape in the future.
So Why Wait ?? Start today when you are still YOUNG
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